Life Goes By Quick: Money Thoughts From A Boomer Retiree With Cancer

Life Goes By Quick: Money Thoughts From A Retiree With Cancer

The following is a guest post on money thoughts from David, a Financial Samurai reader and ex-government bond strategist in his 60s. David shares his money thoughts from a boomer retiree's perspective with cancer.

We had a fantastic exchange over e-mail and I invited David to share his wisdom about money. After all, the best way to learn is to learn from someone who has been there before. Take it away David!

Life Goes By Quick

I sent a long e-mail to Sam with various musings on aging, retirement, debt and all somewhat relevant to the Financial Samurai audience. As punishment for the missive, Sam asked if I’d be willing to write a guest column or, alternatively, do community service. I opted for the former.

I spent the bulk of my working life as a strategist for various investment firms, essentially forecasting the direction of US interest rates for institutions like central banks, pension funds and anyone else with a few billion in assets who would listen. I did that for better than 30 years. For a large chunk of that I was the top-rated strategist in the field, on financial news programs a hundred times, and getting around the world.

Business class had its advantages, like at the end of one trip that in the space of five days found me in Riyadh, Zurich, Rome, London and finally Reykjavik. Reykjavik was not on the schedule, nor was the heart attack I had on the flight home that forced my flight to land Mid-Atlantic. Still, I got to stretch out nicely on the bed in business class.   

Retirement moment came just past 60, not entirely by self-determination, but not unwelcomed either. I decided to take the career down a notch, writing from home versus commuting three hours a day, five days a week, for the equivalent of 16 weeks of vacation, to a job I’d grown tired of.

Don’t you know it, shortly after that I was diagnosed with multiple myeloma, an incurable blood cancer. There are treatments, and oncologists say I could go on for years and new treatments are coming that hold promise.  

Then there’s the dark side of 50% five-year survival rates. And to think my biggest retirement worry was my money lasting into my 90s. Myeloma puts things in perspective, especially the time I have. Maybe what follows will give others some perspective on that. 

The Runway To Retirement Gets Shorter

The older you get the less time you have ahead of you. Now think about that from an investment perspective.  

A tale-ender of the baby boom was just leaving college into the 1980-82 recessions. That event proved a career boon because it broke the back of inflation, presaged the tech revolution, and started the financial markets on a remarkable run. There you were entering household formation years, with interest rates plummeting, jobs plentiful, real incomes growing and disco at an end.

By the time the NASDAQ bubble burst in 2000, you likely had a home, a family, and while painful, you were only in your 40s with a long runway ahead to recover from that recession. As an added benefit, the Federal budget was actually in surplus leaving room for tax cuts and fiscal stimulus. 

In the ensuing decade, easy money and creative financing encouraged a housing boom allowing you to refinance your home to save on monthly expenses or, better still, refinance into larger mortgage, or take out a home-equity loan to do whatever your material heart desired. It was all the rage; for much of the early 2000s, home-equity borrowing equated to around 10% of total disposable income.  

Into the Great Financial Crisis, you're in your 50s, have kids in college, the home is underwater, 401(k)s just dropped 30%, your economic productivity is stagnant (a statistical fact as you age) and that runway to retirement is rather shorter.

The stock market has, through the benefits of low interest rates and deficit-boosting fiscal policies that have encouraged the biggest buyer of the stocks to be corporations themselves, restored fortunes putting the older demographic cohorts in a better position for retirement. 

Here’s the thing. I don’t see the older demographic cohorts, i.e. the 55+ contingent, tolerating another downturn with the patience exhibited in their youth.  

Median Age of United States Population & percent over 55

Here’s why. The 55+ crowd lived through two major downturns, several minor ones, and had the time, energy and incomes to recover. They don’t have those ‘assets’ now.  The time has been spent.

With yields after inflation and taxes zero or negative, the tradition of the bond market as a conservative haven isn’t much of an alternative. When the stock market starts to slip, a lot of people’s goal will be to preserve what they have.

Money Thoughts: No Upsizers To The Downsizers

The 55+ cohort is both older and larger than at any point in US history, which is to say that to fund their golden years they’ll be selling things – like stocks and their homes. 

The next recession might prove to be mild in conventional GDP terms, but the retiring demographic will not have the patience to wade through it. 

And they have things to sell. Older folks are richer than everyone else; they’ve had a lifetime to save and pay down mortgages. The older cohorts have a higher rate of stock ownership than younger ones, and higher rate of homeownership as well.   

A weight on the already aching backs of the 55+ people is their homes.  Historically, homes have been a store of wealth. But urban lifestyles, smaller families, low population growth, and yesterday’s housing fashions could prove the proverbial white elephant when retirees opt to downsize.

Homeownership Rate By Age

Money Thoughts: This Time Is Different

Apple and Microsoft alone accounted for some 15% of the S&P 500’s gain in 2019. That’s a scary concentration. The chart just below is a perspective of how expensive stocks are to incomes. It displays how many hours of Average Hourly Earnings it takes to buy a share of the S&P 500. 

Hours of work needed to buy the S&P 500

We’re at the highest such ratio ever. The S&P was up 31% in 2019, a huge gain, but with GDP was up just a tad over 2%. That doesn’t make a lot of sense, certainly not over the long haul.   

Consider the aging population and the very real chance that entitlements will be at risk as Federal Deficits mount. For my crowd, it’s a frequent topic of conversation if not anticipation. 

The median age in the US was 30 in 1980; it’s over 38 now and will be over 43 in a few decades. Older people behave differently than younger ones; they spend less on things, more on services and medical stuff. It’s no wonder that they tend to be more conservative with their investments as well.  

Population Segments by Age

Money Thoughts: Where Does One Invest?

I’d look to short-term, say no longer than 2-3 year high-grade bonds, to park money and look to safe-as-can-be dividends in blue-chip stocks. I might stay up at night if they’re down 20%, but it’s income that’s my concern.   

The safe-haven need can be adequately complicated via other means investment firms offer, but you get the point. I do like holding some gold (mining shares) to about 5-10% of my portfolio because I think the Fed will try to raise the inflation bar, rhetorically anyway, in the next cycle.  

And I’m worried about the Federal deficit; the GOP has lost the fiscal-responsibility plot and Democrats have a spending lean all their own.

Related: Investment Returns Versus Active Income: When Work No Longer Matters

Money Thoughts: Rolling The Clock Back

Facing both retirement and an incurable cancer, I admit to asking how I would have done things differently. In retrospect, I’d have bought more Apple, Amazon and Google, but that’s not the point.  

Outstanding non-financial corporate debt as a percent of GDP

Looking back is a difficult task as it can incur a degree of guilt or shame or self-recrimination; shoulda, woulda, coulda.  

I come back from that and realize that ultimately I’m in a very good place.  It’s easy to say I could have been this or that, but without the benefit of maturity, confidence and perspectives gained over the intervening period I doubt I would have been able to do this or that. 

It’s the dilemma George Bernard Shaw put forth that youth is wasted on the young. And indeed, the journey itself was rather fun. There’s a lovely poem called ‘I’d Pick More Daisies’ that I sent to my boys after I got diagnosed. So there, I’d pick more daisies.

That said, I would emphasize the things I did right financially; saved as much as I could, maxed out on retirement plans, didn’t get carried away with the noise presented by the financial media and kept my eyes on the prize of retiring in comfort early enough to enjoy it because one never knows.

I know that you know things happen as you age. But let me warn you that you will appreciate time, whatever time you have, when these events cross your path and cross they will; the runway I mentioned earlier is not only about personal finances. 

The future will come and come quickly. I only hope it keeps it coming.  I suppose I’d still be working if money could buy time. Instead, I’m spending my children’s inheritance to live as much as I can. It’s a fair deal they tell me so I must have done something right. 

Money Thoughts: How Much Money Is Enough?

$4 million give or take. In reality, I can’t speak for anyone but myself. Get a realistic budget together. Make sure there’s enough of a cushion for a rough time. Figure out where you can cut if you have to and still be content. Be honest about your spend and realistic about investment returns.

Yeah, $4 million seems about right here in an expensive town in an expensive state when we want to squeeze in a good deal of bucket-list stuff.  But we also know where we can shave expenses could dip if we toned down the travel, downsized the house, moved out of state and didn’t want to help our kids as they start their lives. 

As an aside, my wife and I maxed out to our IRAs and 401(k)s when we started working in 1982 and are happy we did so. I encourage, and assist, my kids in doing the same with their 401k’s.

I use the Vanguard Wellington Fund as my benchmark, though any low cost balanced fund would do. I am banking on a 3% real return over time, say the next 20 years, which is vastly conservative but then look where I’ve been coming from.

I must say that aside from health issues, the biggest stress is paying for them. When you are on your own, it’s daunting.  

The healthcare plans are confusing, the coverage mixed and, egads, the out-of-pocket maximums between in- and out-of-network benefits will kill you if illness doesn’t. You don’t think about those in your 30s or 40s; you do in your 50s and 60s.

The exchange plans in Connecticut, where I live, don’t include hospitals out of state like Dana-Farber or Sloane Kettering. My wife and I would have to consider moving to get covered (an idea suggested by an insurance broker) or pay an arm and a leg, which is why I’m typing with one hand.   

My parting words are my way of encouraging you to, if not exactly retire early, make sure you enjoy whatever you’re doing and leave ample time for family, friends and interests. It’s a cliché but as John Lennon put it ‘life is what happens to you when you’re busy making other plans.

Life Goes By Quick, Enjoy Every Moment - money thoughts from david ader

Related post on money thoughts: Personal Lessons Learned From The 2008 – 2009 Financial Crisis

David Ader is a 61-year old trying bent on rediscovering his imagination and interests, seeing the world, and trying to do 20 pull-ups a day (he’s up to 13) on his daily routine at the local gym. He’s an A student in archaeology and geology at local colleges, is fishing until he’s bored (he’s not bored yet), and expressing himself on a blog, Prior to all this, he was a strategist forecasting the direction of interest rates and financial markets for a variety of banks. For 12 years running the #1 Government Bond Strategist according to Institutional Investor Magazine. He shares his money thoughts whenever he can.

65 thoughts on “Life Goes By Quick: Money Thoughts From A Boomer Retiree With Cancer”

  1. I know you regret throwing “the number” in your article, but its always a fun topic. As a married 45 year old, married with 1 kid in the PNW, my number would be 5 million in liquid net worth to feel comfortable retiring. Sounds like a lot, but:
    ~1M for healthcare
    ~1M for education (public schools here are terrible)
    That would leave $3M for living expenses, food, travel, housing costs, etc. At 3% that’s 90k before taxes, so about 75 after or around 6k/month. Nice but hardly extravagant. And at 45, I probably wouldnt be comfortable using a 3% withdrawal rate anyway– more like 2.5%
    It’s kind of crazy to think that in some european countries an equivalent quality of life could be had in retirement with almost no personal liquid net worth because:
    -there are excellent public education options available
    -free or very low cost healthcare
    -Much better private and public pensions

  2. Financial Chipmunk

    Great perspective on life and investing. Thanks for sharing. Wishing you all the best! FC

  3. Nice to hear, thanks so much for taking the time to share. Seems like with so many things these days I have to weigh how much they will cost me, not so much in money, but in time, and then consider the opportunity cost.

    I especially liked the four million figure. So many people just kind of forget to throw out actual numbers, and a lot of others seem to forget to point out that net worth is going to be sharply skewed by age; if it wasn’t then it would be real problem. It’s also a bit of a relief to see that your number is just about what I had figured, although in a cheaper town, and in a cheaper state, but with a good deal of travel going on every year that we can manage it.

    Planning to get to some places, and do some things, that were never really feasible with two weeks off per year. Plus, family seems to be scattered all up and down the East coast (with an enclave or two on the West coast).

  4. Thank you for sharing your story and I wish you the best on this next chapter in your life. While my initial cancer diagnosis at 56 wasn’t terminal, it was a wake-up call that helped me focus and put what’s truly important into perspective. Now, 8 years later – I still haven’t found an expiration date tattooed on my bottom, but relish each day, each moment with friends and family. While I enjoy reading Sams’ (and other FIRE related) blogs, it’s good to hear from others with a little more time under our belts.

    When talking about risk with others, I characterize it to stepping off a ladder. The older we are, the more likely the step results in a fall and the longer it takes to heal, if ever. As a result, I’m slowly stepping down the ladder, holding on first with one hand, now with two -vs jaunting up it without looking down as I did up into my 50s. I still take risks, just more cautious – measured ones that are not likely to result in serious injury, should I stumble and fall.

    Like you, I’ve focused more on income over long term growth as that window closes a little more with each year and doctor visit. But, as long as it is open, I enjoy and am thankful for each and every day.

    May your window remain open and clear for many more years.

  5. “My parting words are my way of encouraging you to, if not exactly retire early, make sure you enjoy whatever you’re doing and leave ample time for family, friends and interests. It’s a cliché but as John Lennon put it ‘life is what happens to you when you’re busy making other plans.”

    I’m 56, was originally going to put my notice in on January 1, 2020 and retire early…but have caught the “one more year syndrome”. We live in a low cost, midwestern, Super Bowl bound city. Have ~3M in investable assets and NW of ~3.5M. No debt. Two kids – 1 on their own and the 2nd college grad, still trying to land that good paying job w/benefits.

    My job is not overly stressful, but it is not gratifying…been here, done this. Not much keeping me here but health insurance! My plan was to retire, I’m having a tough time making a decision … until I read your story. I think I am going to finish this year and retire at 57. Time to move on.

    God Bless.

  6. I’ve been getting a lot of comments about my use of the level $4 mn including from people who say, “Wow, you have 4 mn?!?” and “Wow, you only have $4 mn?!?”

    Four million was a throwaway, nothing more. If you’re in your 30s or 40s with kids not yet in college and a long runway, well, yeah, you need a ton. Four million might work, especially if you live in an inexpensive area. Those of you around San Francisco or New York or Boston where between taxes and real estate, will need more than someone in, say, Rice Lake Wisconsin. Someone who is 60+, whose kids are done with school, has a short runway to, at least, Social Security and Medicare and so can manage costs accordingly. Four million for a 62-year old is different than for a 42-year. Of course.

    I’m hardly alone in advising that you create a budget and figure out what YOUR personal $4 mn would do. It might be $1 mn, it might be $10 mn. Budgets are a royal pain, I know, to create, to adhere to, and to maintain. But it will prove enlightening and help you make decisions.

    So, I apologize for saying $4 mn to those who were depressed, and caution that it might not work for high-living lifestyles to some in the elated camp.

    1. WannabeTrophyHubster

      Haha, I can’t believe people are giving you a hard time about that. Except, some of them are.

      Just shrug it off, I say.

      Godspeed to you and to all of your family through your coming fight with the cancer, David. Here’s hoping for a long remission, followed by a breakthrough from one of the pharma guys in their gene therapy arenas to completely wipe it out.


  7. Great post. Unfortunately too many people don’t hear, let alone listen, to this type of advice until it is too late.
    I will continue to take a little bit of retirement each day, and show my kids that you can have your cake and eat it too.. just need to plan well and be willing to be spontaneous.

  8. Thank you for your post David. I found it and the comments very enlightening as a GenX FI looking to plan ahead.

  9. Question David – how do you assess the value/risk of having a position in 20 year treasuries given the current climate? Appreciate your insight.

    1. With the yield curve pretty flat, 2s/20s at about 60 bp, I think you’re mad to buy a 20 yr Treasury. You can buy a short term corporate bond etf of the bonds ourtright and get 2.15% or. That’s about what a 20yr Treasury yields OR a 2-yr CD for like 2.25%. I don’t think yields at the long end are rising a lot in the coming years, but I suspect the Fed will try to talk up inflation in the next recession and so steepen the curve and maybe push long yields up a bit. And I think the state of our growing deficits which will mean increased long-term Treasury issuance and possibly hurt the dollar can do the same.

      I’m not an expert on telling people where to invest and this is just me thinking out loud. BUT, you look at some REITs that yield like 11% and think, hmm, I could take a 20% hit as long as the income is safe. Or some bank preferreds which probably behave like a 20yr bond (duration-wise) and yield like 5%-6% and are qualified dividends, meaning a lower tax rate. I’m considering those myself, by the way.

      AGAIN, I’m not a financial advisor in the least, just sharing my thoughts.

  10. I really enjoy reading all your comments as I am also retired and in my 60s. Been retired for almost 8 years now. Not to get too philosophical, but here’s what I’m trying to figure out.

    When you work you basically trade in a year of your life for a years worth of money. You keep doing that from the year you start working to the year you retire. So by the time you get closer to your 50s you got a lot more years to look back on than you have to look forward to. When you’re younger your body and mind work pretty good. As you get older particularly past 60 everything starts to decline and you notice it.

    Almost all the stuff I read about retirement is quantified on the basis of money. If I work yet another year, I can pack away another X amount of dollars into my net worth. But nobody seems to systematically thinking about giving up yet another good year of your life in exchange for money. After being around for 60+ years I think I can confidently say when you’re in your 20s you really have the health and energy to enjoy. When you hit your 60s you start slowing down but most are still able to travel, stay active and pursue interests. What good is a lot of money when you’re in your 80s (If you’re still on this good earth) other than spending it on lots of healthcare expenses?

    Maybe somebody should figure out another way to define life aside from dollars earned from a years worth of work. Like a vitality quotient or something. For example, On a scale from 1 to 10 when you’re in your 20s your vitality quotient is 10. In your 60s it goes down to 5 and in your 80s it goes down to 1. Why would anybody want to trade in a year Of their life with a vitality 5 for money? You’ll never get that year back. Does it make you any richer aside from the quantity of dollars you have in your investment portfolio? Do we have any other way of defining the richness of our lives aside from quantifying it with money?

    1. This is the thing about getting older; wisdom. You are too right. I get back to the expression that youth is wasted on the young. I realize fully that people struggle to make ends meet, but also that those ends can be bad choices IMO. I mean, spending on overly large homes, overly new cars, stuff. It makes great sense about retirement advice focused on the money angle because 1) it’s important, and 2) those writing about the money angle can get compensation for it. The happiness quotient is vastly more personal and I think is a moving target as you age and learn what is important, what does make you happy. As many people who responded to me have indicate, an important investment is in yourself; keep in shape, see your doctor, GET SECOND OPINIONS, and have hobbies and friends around you.

      I look at some of the massive homes in my area — multi multi million dollar homes — and don’t envy or respect the residents. Does a family of four, kids soon off to college, need 8,500 or more square feet? I think of the fun things they could do with that money.

      I’ll give you an example. For his graduation gift I had promised my older son a ‘Back to the Front’ trip to visit battlefields where we had family fight; Normandy, the Somme, Bastogne. I took a very old and close friend who has some financial issues because he, too, would enjoy it. It cost money, yes. But it was better than a Rolex to give you some comparison. PS we found a GI’s dogtag in a foxhole near Bastogne, 101st Airborne, and returned it to his family. I wrote about it and him on that blog of mine. As my son said, “DAD! The metal detector just paid for itself!” Well it paid for a lot more in terms of experience and friendship.

      1. David, That is the most beautiful and amazing gift you’ve given to both your son and your friend! Reading it brought joy and tears in my eyes.

    2. “Why would anybody want to trade in a year of their life with a vitality 5 for money? You’ll never get that year back. Does it make you any richer aside from the quantity of dollars you have in your investment portfolio?”

      At 55 I don’t have a lot more that I want to accomplish to be honest. My career has been really good and most of my important decisions and life choices are behind me. I will never be an astronaut (well probably not…I’m not going to pony up the money for a sub-orbital flight), write the great American novel or win a Nobel. The odds that I’ll want to do a startup and work THAT hard for success there is remote.

      So as long as I am mostly content I’m okay with trading another year of my life working a job I don’t mind that much while at a vitality 5 in exchange for getting my kids closer to FI in their 30’s or 40’s that’s a reasonable trade.

      And rather than buying bigger houses or cars I can buy experiences for the family with the income…something I might not do as much without the income stream.

      As far as I’m concerned I retired Jan 1, 2020. I choose to go to work as the best and fastest way to fund some stuff I want to do and it effectively kills my sequence of returns risk of FIREing at the peak of the market.

      As far as quantifying richness of our lives, dollars is just the easiest metric to calculate. Nobody at our age and wealth believes money=happiness but we also understand that poverty is not happiness either.

      1. Yeah, I can relate to everything you all talk about. Poverty is long behind us. So we face the question of what do we do with our lives now that basic needs are met. The happiness index current application is presented as an alternative To GDP in International comparisons of standard of living. Some social scientist someplace should integrate a non-monetary measure into retirement satisfaction and happiness. It’s in there somewhere. most people I know, a health issue or one of a close family member or friend made them think more deeply about Happiness beyond money.

        Believe me, I value reading blogs like yours and believe it’s very important to think about having enough money to meet basic needs. Nevertheless, let’s place ourselves in the historical timeline. At the dawn of the industrial age industrialists created conspicuous consumption to get the masses to spend all the extra money they earned as they migrated from the farm to higher-paying jobs in their factories. So beyond basic needs was born the Rolex watch, the fantastically successful marketing campaign of Debeers That integrated the diamond into every newlyweds spending, the luxury car, etc. etc.

        I notice that the academics are beginning to write about the age of post scarcity, UBI and a time when people work only If they want to. it takes about 20 to 30 years after an academic discussion for stuff like that to begin to bubble up into public policy. Finland and France are already down to a 30 to 35 hour work week. Finland is supposed to be the happiest place in the world. It’s just a matter of time before other countries follow. (pun intended).

        Since we are talking about financials, let’s take the warren Buffett question. If you didn’t have to work, what would you do with your life? a hypothetical. If you spent a year of your life, say age 55, To earn an extra $200,000 we can project how much that money is worth five years hence. At a growth rate of the commonly accepted 7% per Annum that money would grow about $283,525. If you could, Would you give up that amount to purchase back that age 55 year? A more realistic question would be would you have retired a year earlier and give up that extra year of income knowing what you know today?

        Judging from the posts here, Seems like most of us have already decided.

        1. The equation isn’t whether I would buy back that year for $283K in 5 years but whether I feel it’s worth a year of my life to give one of my kids the passive income from $774K in 20 years when they are say 37.

          If I can burn 1 year of my life working longer to help push them over the threshold to 30 years of FI that’s no brainer trade for me. And it’s not like my job is horrible or anything.

          How many parents here disagree with that trade off? At 37 they hopefully have saved their own $$$ for FIRE because you sure won’t be able to FIRE on $774K in 2040.

          Too bad I’m not saving $200K a year so it’s not a no brainer…and I’m not likely to see 7% returns. :).

          But for me the trade is worth it.

    3. Marvin McConoughey

      “What good is a lot of money when you’re in your 80s (If you’re still on this good earth) other than spending it on lots of healthcare expenses?”
      I am a very happy 82 . A lot of money, whatever one considers that to be, offers much in old age. It is insurance against a catastrophic recession, or worse. Can’t happen here? I hope that it won’t, but hope is not the best way to plan. Toys. I like toys, whether they be the latest tool for my woodworking shop, or a present for my wife. Help. It feels good both to help others and to have the potential to do so. Health. Most expenses are within the realm of normality, but a few diseases come with truly extreme costs for personal care and medicine. Your reference to “lots of healthcare expenses”is a grim reality for some. And without adequate funds, one can have challenges even from moderate medical surprises. Passing it on. I find pleasure in thinking about, and planning for, what happens after we are gone. Leaving some behind is good, not bad. There is one more factor. It feels better to have a surplus rather than just enough.

      1. Hey guys, I hear everything you’re saying.

        Nnt. You got a pretty common situation with people who Feel they’ve made enough money for themselves. Lots of them, like buffet, continue to work and make money to give away to charities. Or To others. It’s nice to see that lots of people have no interest in working for themselves but are willing to work longer if it will help others.

        Not to get too lost in tangentials. We thought about the same thing for our kids. we’re helping them max out their 401k while they’re still in their 20s. Our worry about giving them money outside of restricted retirement funds is turning them to trust babies. I’ve seen Too many people bounce around from job to job until they get to their 40s. Once the trust money hits they lose all incentive to do anything constructive, kick back and cruise. How you planning to get around that?

        Marvin. I should restate. “What good is money When you reach an age where your health is in steep decline”. You’re lucky you’re still majorly active in your 80s. I agree. Having enough money and adequate financial savvy to weather the economic cycles and common health issues brings peace of mind. Peace of mind enhances quality-of-life. and there is joy in giving. I don’t know if I’m at the age yet to think about to parceling out my net worth, but I can’t tell you how worthwhile it is to give the waitress a five dollar tip for a three dollar beer. Next time you walk into the bar, they are so happy to see you.

        Great discussion, guys.

  11. David my prayers are with you. What I’m about to say isn’t directed toward you, it’s directed at the “narrative” we use to project our financial lives and pretend toward financial independence. Boomers are rich. Boomers created their wealth mostly by being boomers. Wealth is a function of economic productivity and the decades beginning with the 70’s were extremely productive. In the 70’s woman’s lib happened which meant in the 70- 80’s women went to work. In the 60’s the “average” family could survive the “average” life on a single “average” wage. By the 80’s the increase in productivity from having 4 hands supplying the bank account instead of just 2 firstly caused the huge inflation of the late 70’s and 80’s and secondly set in stone the need for 2 bread winners where previously one would do. Because of this increased productivity housing prices exploded and the size of properties exploded. Housing had always been the silent majorities ace in the hole and the WW2 gen sold their brownstones in the city at 10x or 20x profit and moved to cheap gussied up garages in places like the Villages, and banked the delta between the brownstone sale price and the spiffy new garage. That model worked for a generation or a generation and a half. Wealthy boomers could afford to buy the brownstones (or some McMansion equivalent) based on the 2 hands to 4 hands increased productivity and cheap money. The problem is 2 hands to 4 hands is a one off. There is not another set of hands in the wings waiting to go to work.

    In the 00’s cheap money encouraged the McMansion. Too much house for way too much money. Cali is ground zero for that scene. Markets are supply demand driven and boomers represent BIG supply at age 60+. They represented big demand at age 40. It is unclear Millennial demand and Millennial financial resources will provide enough demand to match supply and over supply means fire sale prices on the asset WW2 folks used to fund their retirements. If you’re planning on a 1.5M payday on the house and you get 0.5M your shorts start to pinch and your ability to spend is curtailed = a slide in GDP. A slide in GDP = a slide in equity prices. Boomers are about to tap the mother load. Previously they have been stocking the mother load by dollar cost averaging into equities using low cost index funds, and that caused a zombie like automatic increase in asset prices disconnected from asset risk. In addition corporate management has been using cheap debt to buy back shares further increasing asset prices. Increased share price without increased productivity in the face of increased debt on the balance sheet is called financial engineering. It’s a convenient thing to do as a C suite player, pump up the asset price without pumping productivity and cash in those options. In the mean time the DIY bogglehgead owns a retirement account full of zombie equity funds of unknown risk, just begging for a pin to prick that bubble. Why yes Google APPL AMZN NFLX BRK Costco all great choices, any and all better choices than the VTI zombie.

    Now the worm is about to turn. Now the accumulator’s become deflater’s Now the underfunded pensions need to start dishing out their promises. Now the McMansions go on sale but wait the colleges have stolen all the money from millennial parents with outlandish tuition inflation, such that their children because of student loan debt and credit card debt and auto loan debt can not acquire the McMansion even at 2.5% financing. It’s not “this time is different”, it’s the DIY narrative was flawed from the git go. 4M is probably OK for a 25-30 year retirement as long as your expense is about 3%, but due to GDP retardation due to demographic and productivity reality and pension short fall and increased debt collateralize with crap assets 4M could easily become 2M PERMANENTLY. If the economy ain’t got no motor ,smoke and mirrors ain’t going to get you to NJ. Also don’t forget SS is getting cut in 12 years if no changes are made to the law and in my opinion lawmakers will simply let the law take effect and dodge that bullet.

    The other problem is no one plans for end of life. Here’s the 411, we all gonna die and dying can be extremely expensive. 1/3 get some kind of cancer. Of the 1, 20% get a really bad diagnosis. Of that 20% cohort, 20% die which means 80% survive, but survival ain’t cheap. Of that 80%, 40% of them are in bankruptcy after 4 years. That’s from a 2017 study. Another point, the chance of getting Alzheimer is 1/10 at age 65, but rises to 1/3 at age 85. A woman that lives to 60 has a 33% chance of living to 90 and a 2% chance of living to 100. The men are pretty much all dead at 85. That means as an 85 year old woman you have a 1/3 chance of getting Alzheimer, and Alzheimer has a 12 year average prognosis once diagnosed so as an 85 year old woman you have a pretty good chance of getting the disease and requiring 10 years of 24/7 memory care. How much of that reality is included between the jet setting travel brochures? Medicare doesn’t pay for 24/7 memory care. For every couple there are 2 deaths and 2 ends of life to plan for. 4M extravagant? We think not.

    One other thing is inflation. The FED is hellbent on creating inflation and crushing the dollar to monetize the debt. Inflation on a fixed income will flat out eat your lunch LITERALLY

    My solution is to 1 have a large portfolio with low leverage. Have a short retirement. Have wide non correlated diversity with limited equity exposure. Increase exposure to things that go up exponentially when stocks crash like gold. I use a rule of thumb 5% as a base line and then up 2% for every 25% of deviation from the long term mean for the S&P. I’m presently at about 13% in GLD, other commodities like oil and food and BTC. When the time comes and equities crash my exponential growers will soar and I sell them as they move deeply into profit and live off that cash or re-balance into equities which are now “cheap”. When the train hits have a plan to get off the track before you get creamed.

    Also I don’t believe in “max out your pretax” after age 50. Max the hell out of it before 50 and then invest in a brokerage after 50. If you do that, at 65 you will be able to Roth convert in a very efficient manner. The tax code is rigged to soak the rich and the government considers you rich as soon as you exit the 12% bracket. If you don’t Roth convert invest in KY. Not Kentucky but the lubricant.

    Good luck with your diagnosis. I had unexpected heart surgery last year and had to face down my own mortality and also the likelihood of a stroke post op. My heath is good but not 100%. I did have my plan in place prior, so my wife was covered in any eventuality, but my plan is very detailed and personalized and contingency driven so I totally get your concern and the magnified perception of risk associated. The typical narrative totally ignores this reality. Thank you for addressing this important topic.

    1. POWERFUL. David, you so eloquently provided a narrative that stuck a chord with this 40-something avid FS reader. The article and the subsequent comments made this feel like a true ‘community’ as we all set aside the money quotient for a moment and took in the overall message that so powerfully reminded us there is much more to life than the numbers on the computer screen or the quarterly statement.

      As a married father of two in Northern CA, I soak up the dialogue, wisdom, and experiences that Sam and others who comment here have to offer. Sam you nailed it with the presentation of David’s article, and David, you definitely have a new follower here with your blog and I wholeheartedly wish you the very best.

      The reminder we all needed all wrapped up in a wonderfully presented article. High-five to everyone here!

  12. David S Pumpkins


    Congratulations on such a distinguished career, and successful retirement! Prayers up for your health so you enjoy many bright days ahead!

    I have far less financial experience than you relatively speaking. I did work 2 years in a research department passing Level 1 of the CFA but changed industries. I can’t understand why you have such a low % in equities. Since 1970, the S&P 500 had it’s worst 5 year annualized return of -2.35% (median 13.6%). Even in the couple periods that were -2.3% investors patient enough to hang in there another year saw their returns go positive. What am I missing? I’m in my mid-forties and am guessing risk tolerance just goes up exponentially when your working days end.

    Also how much do you budget, or think we should budget, each year for healthcare?

    Geaux Tigers!!! #getthegat

      1. I didn’t think it was obvious because risk tolerance can’t go down exponentially either. Can it?

        My point remains. If you have enough, then there’s no need to keep taking excess risk to try and get more.

        1. Paper Tiger

          I struggle with this truism and at some point just have to come to grips with it. I have more than enough but I am 62 and 87% of our portfolio remains in Stocks, actively managed MFs, Index Funds, and Alternative Investments with only 13% in Cash, CDs, and Bonds. This mix has served us well to this point but I just have not grasped the concept of, “when you’ve won the game, stop playing.” It is a challenge to start moving the portfolio to more conservative investments when those types of investments are currently paying so little. I know I just need to bite the bullet and address it but man, am I struggling to actually do it.

          1. I am in the same boat as you Paper Tiger, just turned 62, retired at 60 with more than enough. My investments are 99% in equities and 1% in cash. When I retired I took most of my pension in a lump sum and invested in bond funds. After 5 months of seeing these funds going nowhere, I gave up and moved all the proceeds into a S&P 500 index fund. I feel it would take a major catastrophe to get me to give up my equity funds. But even if the market does go down substantially, I will still have enough left over.

        2. David S Pumpkins

          Ahh…actually it CAN! Exponentially means more and more rapidly. He said his equity exposure is 20%. I’m guessing it wasn’t always that low for what many consider the greatest tool to wealth creation.

          The more interesting question is why not store away enough cash in bonds/cash/low risk assets to make it 5 years and the majority of the rest in an S&P 500 fund. You can prune back the equity exposure in good years. Sure you’ll say there’s no need to risk it. My point isn’t the exact numbers but the concept.

          1. David, I like your proposal to keep a block of mid-term money (5 years?) in something very secure, with everything else in the S&P. Above a certain level, one can afford the risk and can ride out fluctuations. Nothing beats the inflation risk like some equity exposure. I’m 55 (and needed open heart surgery 18 mos ago for a valve!), have started working part-time, and we have $6M liquid (about half in IRAs and half in taxable accounts). I feel like I could stand the risk in cash flow, in exchange for keeping a long-term upside and inflation hedge.

          2. David S Pumpkins


            Couldn’t reply to your comment so had to reply to mine. Thrilled to hear you feel good enough to do some more things!! What caused the valve issue? How do you feel post surgery vs pre?

            I was surprised to learn I have a congenital bi-cuspid valve a couple years back and likely will need a new valve at some point. I’m very active now but concerned about the long term impacts.

          3. Hi. Yes, I’m great after my valve repair. Skied out west both winters since and kayaked, hiked, and snorkeled in the Galápagos last spring with my family. My mitral valve prolapse was diagnosed when I was 20, but finally at 54 it started leaking badly. A part was kind of flapping in the breeze, a “flail” leaflet that needs fixing. I was out of breath, coughing, with fluid in my lungs. As is common, the clinic thought pneumonia; but I didn’t have a fever. An echo confirmed it needed fixing. So 3 nights in the joynt later and I was home with a repaired valve and a 6 1/2” souvenir on my chest. It was easy, actually, as such things go. Your bicuspid valve is a fairly common anomaly. I don’t think it starts leaking grossly the way the mitral does, I think it just sometimes calcifies and doesn’t open far enough. Aortic valve they can do trans catheter sometimes, but open is fine. They’re good at those fixes. So just get a cardiologist and surgeon you like (surgeon who has done thousands of valves), and keep an eye on it. Thanks for asking. Valves are physical, and fixable. Easier than the cancer challenge our host has to face, so Godspeed to him!

  13. Thank you for your story David. I wish you well.

    I was in the institutional investment business for 40 years, managing equity and fixed income portfolios for pension, endowment and foundations. I retired three years ago at age 66. My work was exciting, fun and rewarding both intellectually and financially. Over the years I came into contact with many smart and successful people including Wall Street analysts, economists and strategists such as yourself. I also worked at times with two former Fed Chairmen, G. William Miller and Alan Greenspan. I all honesty I was not terribly impressed with either.

    Unfortunately over time, however, I saw the legitimacy (for the most part) of the financial markets replaced by growing manipulation of corporate financial reporting and political interference and influence in the reporting of government economic data and Fed policy. Unfortunately this continues today and is firmly imbedded in the markets, leading to, once again, wildly distorted valuations of both stocks and bonds. IMO, the U.S. Treasury and the Federal Reserve have become corrupted by those in power now, or formerly on Wall Street and in the White House.

    Since retiring, I have gradually reduced my equity exposure to just 20% and like David, primarily invested in short-term bonds. The day of reckoning will come…just don’t know when. With government, corporate and personal debt at all time highs, it is an inevitability. Fortunately for me though, my net worth has put me in the top 2% so I don’t have to grow my assets. IMO, it’s criminal that interest rates continue to be manipulated to near all time lows, robbing investors and savers of a relatively safe alternative for earning a positive, inflation adjusted return.

    My advice to the young is: Save as much as you can, keep debt to a minimum, temporarily reduce equity exposure when valuations are at cyclical extremes (LIKE NOW!) and especially when you start to feel uncertain or anxious, buy a house and pay it off by the time you retire, exercise regularly, laugh have fun and be optimistic, be spiritual, be environmentally responsible, remember the Golden Rule, and above all…Love one another.

    1. Tim, we are very much on the same page. My use of the number “$4mn” was a gimme — it meant nothing. Far less could work if you live in a low-cost state, in a 1 br or trailer, and are content with minimal travel, luxuries, eating out etc. It can be done, of course, but there’s no cushion and if you have, say, $1.5 mn in your 30s and hope to live on that for 40-50 years, there’s a lot of risk.

      Anyway, it’s the fiscal and monetary policies that worry me and why I have some favor for gold and ST corporates. I first followed markets in the 1980s and see current policies so ‘corrupted’ it scares me. Low rates and fiscal stimulus have equaled 2% GDP and yet the S&P was up 30%. That doesn’t fit. Corporates have used cash and money from issuing debt to buy back their own shares, not investment for productivity. There will be a reckoning and I’m in your ‘sell strength’ mode.

      But then that is my thesis, especially for the older cohort. They will sell because many concur with that view and can sell in IRAs and 401k’s without incurring tax events as they, fingers crossed, pace themselves to wait for Social Security max payout at 70. I fear that younger generations won’t have as much of that particular benefit, which brings up another policy error, i.e. not addressing Social Security’s impending asset/liability mismatch. Another story.

      Did you know me or follow my work when I was in the business? David

      1. David, I don’t believe our paths crossed. At my age I don’t recall all of the interesting people I had the opportunity to meet and follow over the years. But some are names such as:
        Edward Kerschner
        Barton Biggs
        Laslo Biryini
        Abby J. Cohen
        Ed Yardeni
        Ed Hyman
        Elaine Garzarelli
        Richards Bernstein
        Jim Grant

        There were others as well many who could be seen often on Wall Street Week. That’s dating me somewhat eh?

        Regarding my prior post I failed to mention that I was able to save more than many because my wife and I didn’t have children and we stayed together. Having children and getting divorced can make a big difference in how much you are able to save for retirement.

        But ultimately
        I credit my parents, who grew up during the Depression, with teaching me and my siblings to save.

        Some people never learn to know the difference between want and need.

    2. There must have been positives to your career and the current financial market. Even Drukenmiller seems positive about the market right now.

      The real dangers seem to be health insurance and the Federal debt. Best economy in a long time and the country is in debt. And we still can’t get health care and college expenses under control.

      But the technical stocks keep going up.

      Try looking on YouTube for a video on dividend investing and see if you can find one not created by a 20 year old with a $10,000 portfolio on RobinHood or M1 Finance. That is what our youth (and me) are watching for financial advice.

  14. “Instead, I’m spending my children’s inheritance to live as much as I can. It’s a fair deal they tell me so I must have done something right.”

    Good for you! My parents made many sacrifices during their working years to send us to the best schools and provide homes in idyllic neighborhoods. I told them I want them to spend their last dollars the day they pass away. I don’t want anymore from them. Theyve given so much.

  15. Thank you for sharing your insight. I too worry about the large baby boomer cohort and the stress it is going to create on the economy and government programs when they start retiring in droves.

    The potential glut of housing and stock shares when boomers try to monetize them can cause the whole system to get devalued as supply will outweigh demand.

    As a generation Xer myself I worry about the impact being caught in the crossfire of one generation trying to sell (boomers) and one that is not really looking to buy (millennials). You are right that millennials have less desire to follow the American dream and buy a home with a picket fence.

    Sorry about your diagnosis of multiple myeloma. Health is the one wildcard all of us face. The only thing you can do is enjoy the life you have in the moment and not postpone things you want to do.

    Best of luck and again thanks for sharing (glad you chose this instead of community service lol)

  16. I have three friends with that disease. Two have been in remission for nearly ten years and the third was diagnosed only two years ago, but he smoked me at tennis singles yesterday. I’m glad the survival rates for my friends seem to be 100%. You are right in that it certainly changed their outlook on the future.

  17. Maurice Cuffee

    Hey David. Multiple Myeloma can be treated very aggressively. I am sure you have gotten second opinions and researched the pharma companies. As a doctor, please indulge me to give some advice. With any cancer diagnosis, there is always a percent survival given, which means if 50% of people die before five years fifty percent survive beyond. Do whatever you can to be on the winning side, including maximizing your diet: no additives, no preservatives, anti-inflammatory foods. Decrease your stress and meditate. And find the best oncologist you can afford. Also whatever treatment you are offered, consider going into a trial where they test new drugs against standard of care, since SOC is what you are going to get regardless.
    Remember, laughter is the best medicine.

    1. Well, I’m working out most days and pretty aggressively. I do meditate and find both apps (Headspace, Calm) and Youtube guided meditations valuable. I have seen, no joke, five oncologists. Why five? Well, you learn something new from each and two are myeloma specialists with well-known facilities in New York and Boston. I’ll use one as my overseer and a local doctor for the routine stuff. Yes, clinical trials are being investigated, zometa infusions for bones, and after nine months of being pricked, probed, drilled and getting conflicting and sometimes dismissive conversations, I’m comfortable with the doctors. It took a while and I was quite agitated by the process.

      It’s funny, no funny ha ha, but after my heart attack I did a lot which will serve me well with my myeloma. I think your advice is sage and reinforces so much of what I’m doing. Thank you.

  18. Thanks for the article and wishing you well too.

    I learned all about health insurance in my 30s as my wife had a mysterious neurological condition. I even wrote comments to the Dept of Labor regarding the regulations on the Obamacare insurance appeals process, that they appeared to implement.

    As I get older (44) I often wish I sometimes wonder if I am working too much and enjoying life enough. But my kids are young and take a lot of work. I also just got a new job, paying a lot more, and enjoy it and what we do a lot, which coincidentally, is in the development of treatments for cancer. Reading your story makes me want to work even harder.

  19. I like you to know you’re absolutely right. Living in Connecticut I also find it a very expensive state but we live in the Northeast and part in the beautiful town called Woodstock. If you like the outdoors in rural areas great place and close to Boston, Providence and even New York.
    As a former physician I also know before I retired I went to a class at Dana Farber and felt that multiple myeloma could be kept at bay for at least 20 years and maybe even cured.
    I hope that is the case for you. My only other thought be your own patient advocate . Medicine has changed.

  20. Hi David. Thank you for sharing your story and and insightful thoughts! I am humbled. You share a lot of wisdoms and I believe you on enjoying time with family and friends. All the best to you and yours and thanks again!

  21. Excellent post! As someone who is not much younger than David, I appreciate his candor on how his priorities have changed over time, the steps he took to prepare for retirement, his perspective on what is important and his current plan to enjoy his life. Lots of food for thought. I also thank him for the is simple yet profound.

  22. Financial Freedom Countdown

    Wishing you all the best David in your treatment. Looking back, do you wish you had retired earlier even if your nest egg was smaller?

    I do like gold junior mining although most of them have operational cash flow problems and dilute shares raising capital. Curios why you added this stressful sector to your portfolio. I’m still bullish on tech (even large cap) and don’t share your pessimism even at these levels. But of course, I’ve worked in tech so might be biased.


    While even the most financially savvy prognosticators may not be able to predict the future of the economy, nor recommend perfect investment moves for individuals: your spot on exhortation to “make sure you enjoy whatever you’re doing and leave ample time for family, friends and interests” is sage advice for one and all (no matter their age). Beyond chemo and other treatments— fight cancer with family, friends, interests, love and hope!

  24. TheEngineer

    Of all the article I’ve read on FS this year, this article is the by far the best example of live and learn.

    When I graduated with my master and went on to the very last interview at the company I worked and succeeded with FI, Jimmy was carried on a stretcher due to a heart attack – the event was a dot to be connected later by me (as told by the late Steve Jobs Stanford Commencement Speech 2005).

    Jimmy was the IT infrastructure architect and I after 7 years of working became the IT software architect – we became good friends.

    Jimmy was very passionate with his work – he can visualize and describe in details how an information package arrived at your desktop from the outside world vetted by many layers of corporate hardware and software that he personally has devoted his entire career implemented.

    Honestly, I was envious of Jimmy’s passion for his work.

    As I got to know Jimmy better, it was his personal life that ate his lunch.

    Relationship – the connection with his wife and children were nothing more than a provider. His marriage dissolved 10 years after I’ve joined the company. They were together for 25 years.

    Health – the heart attack I witnessed 10 years earlier was followed with the failing of kidney. Soon after the divorce, Jimmy was wearing the dialysis bag to work.

    Financially – Jimmy earned well over 200k on the average over his entire career. When I left the company 12 years after the first interview, financially, Jimmy was falling apart.

    So I thank Jimmy for the life lesson and helped me connect the dots – a successfully life = money + relationship + health + a pinch of passion.

    So thank-you David for the confirmation!

  25. Hello,
    Thank you for sharing /encouraging David to share his story. Beautifully written , thought provoking, and honest.
    David’s message really struck a cord with me. I am the same age as David , did “ all the right things” Financially to secure my future,etc , etc . Youngest is 30, all four kids are College educated with zero debt. You get my point. I haven’t been “ struck” down with a medical crisis but plenty of my friends have found themselves in similar situations.
    Life is short and runs , at times, at an unsustainable pace.
    I try to embrace the following Tibetan proverb everyday – keeps me in check.
    Eat Half
    Walk double
    Laugh triple
    And love without measure.

    Cheers ,

  26. David,
    Great article. I’m a year or two older but clearly not wiser. You made some great points and I agree that $4M is a good number to strive for. I pray you stay well and keep fighting the good fight. You have much to share with the rest of the world so I pray God allows you plenty of time to do that. Like Ferris Bueller once said, “life moves around pretty fast. If you don’t stop and look around once in awhile, you could miss it…..”
    I think your article helped me keep everything in perspective. Stay well.

  27. Christine Minasian

    What a great article David!!! Your insight, experience and honesty is a gift to us all! I’m so glad you didn’t say you need $10M + to retire…the average person just doesn’t have that kind of money/retirement goals in all reality. Just hang in there, be strong and keep praying!! I know I will for you.

    1. $4m is tough for many folks to save for retirement…even relatively high earners as many will live in HCOL areas.

      A couple years ago I met up with some colleagues I started work with some 30 years ago and one said an amusing thing when we talked about retirement. She said “oh we’re the usual two engineer family with a mil each in our 401Ks and the house will be paid off and all the kids are done”

      Given the last couple years I’m sure they are doing even better but it strikes me that $2m-$4m for folks that picked the right major in college is more than possible given folks with similar career choices can fire at $1m in their 30s.

      A FIRE book I recently read recommended that kids pick income over passion for college majors and work their butts off and save for the first years to get FI…then pursue your passion in a less remunerative field without needing to worry about putting food on the table or saving for college and retirement.

      I think that’s wiser than trying to make a living and saving in a passion field that makes little money.

  28. David. Thanks for writing this. As a fellow analyst on Wall Street and cancer survivor I can empathize with you…this is among the best things I’ve ever read on this site and will definitely check out your blog.

  29. This is incredible. Thank you David and Sam.

    David I am pulling for you to beat this thing.

    If I may ask a question: you said $4m is enough. I assume you mean for a younger boomer like yourself. Given your view of the future, what do you think the right number is for younger folks (40s) who frequent this site in the hopes to retire early and pick some daisys?

    1. It’s so hard to put a number on that. I think first and foremost it to get the medical insurance side right — it’s costly, yes, and restrictive in terms of where you go if need be. But that aside, you need to think about where you live and want to live. I’m in West-bloody-port CT where taxes are pretty high and home prices have been sliding for 10 years. I could move to Florida (yuck) or somewhere and save a bundle. I do the math every so often. Florida (yuck again) would save me about 20-25,000 per year! That’s like a $500,000-600,000 portfolio right off the bat.

      I’m not sure $4 mn is enough for someone in their 40s, with college to look to and experiences to fund (travel, education, hobbies). It depends. Is a state U acceptable vs private education? Write a personal note and I’ll give you more ideas if you want.

      OH!!! I was all about high-end private prestige schools, but I got schooled by boys who initially went to such places. The oldest hated it, left after one semester to work at a ski resort in Montana, then take people up on horse treks at a dude range and, as if that didn’t almost give me another heart attack, finally decided to go back to engineering at a western state U. He got a nice academic scholarship THEN in state tutition and graduated with several honors. I think there’s something to be said for being well above average at such a place vs average at a more tweedy school. Something similar happened with my younger son, though he wants to make documentaries about athletes. Point is, there are many ways to save fortunes making the ‘number’ hard to determine. $4 mn will work in some place, not all, and you need to use a very conservative takeout — I use 3% — and, fingers crossed, that will increase with gains to the overall portfolio.

      1. Is the $4M guideline for a couple or a single? Does that $4m include home equity or not? Is that $4m for a 62 year old? Also, come out west (don’t even think about FL). No taxes in Washington state (although don’t live in the Seattle area), reasonable property tax. You can get a beautiful, 2400 sq foot house in a decent neighborhood in Spokane for $300,000. I hope your disease is managed successfully and I appreciate your perspective on how getting hit by that changes your planning.

        1. Hah! Kathy, the $4 mn is something I regret saying. It was a toss out, just to have a number with no meaning. My first and foremost suggestion is to figure out a budget and work backwards from there.

          BUT, back to $4 mn. I used that to assume for no great reason a 3% REAL after tax after inflation return. If one were to get, say, a teacher’s pension of (make up a number) $50,000 with health benefits in your mid- to late 50s, well that’s like having a $2 mn portfolio! Add in Social Security of, say, $30,000 in your late 60s and that’s like a $1 mn portfolio!!! So you have to adjust for those factors.

          I would not include home equity or stuff lying around the house like that Beanie Baby collection unless you plan to sell them immediately. You have to live in a home somewhere, and the Beanie Baby collection is worth less than it once was. I’d only use in that net worth thing, assets that can generate cash.

          The $4 mn is okay for a 32 year old to 62 year old and beyond IF and only if it fits a realistic budget you can live with and live WELL with.

          1. Thanks David, I appreciate the clarification. I should have understood that you meant esd (each situation is different) and it should be based on your expenses and what income will be received. I really enjoyed your article! You should pair up with Mr. Samurai for the 60+ point of view!!

  30. spaceassassin

    Timing of the article couldn’t be more perfect. I was reading through the comments on the college savings article wondering how everyone would fair if they received similar news at 60, 50, 40, or 30. Saving for specific things is great, but locking money away in such a restricted savings plan isn’t making sense for me for exactly the reason David mentioned—life is going to throw things at you.

    And cancer diagnoses don’t just rattle you, they knock the crap out of you. I experienced similar news at 21 years old when my girlfriend of 3 years was diagnosed with cancer. Everything that matters becomes more clearer everyday after you get through the initial hurricane you are thrown into. Sixty-four hours between official diagnoses and chemo will teach you real quick about being prepared for now and not later.

    Planning is critical and savings is a necessity, but liquidity is everything. Cancer (or any illness), unexpected deaths, loss of job can throw the best of planning into a tailspin. And I just don’t see the next 30-40 years going anything like the last 30-40. Systems are already breaking down, healthcare, education, housing, etc. They have all experienced the breaking point already without some type of serious economical or financial manipulation tool.

    The timing of David’s life is critical, and his assessment seems spot on (as would be expected based on his career path). His age group had careers and lives in the best of economic times; all the big-ticket items were fractions of the cost today, and all the returns via stocks, bonds, interest cannot be matched the next 40-years. If you (Sam) or I were earning 30 years ago (inflation adjusted) what we are today, I dream of our estimated net worth potential.

    Maybe you have before, but I would enjoy hearing your perspective and the communities regarding not how much is enough for retirement or college savings, but how much is enough for everyday life? If things went south, I’m curious how much everyone’s war chest holds relative to their 401k, 529, home equity, etc. Everyone (at least on this select forum) plans so well for a great retirement and their kids education, but I’m curious who could still get there if the rug got pulled out from under them tomorrow.

  31. Great article I have been avid reader like many of your fans and you have helped my family so much!

    This is very helpful insight and really puts things in perspective as to what is really important

    Thank you .. keep up great work

  32. 55 with heart attack last year, three young kids and not $4m but still scaling back work anyway. Looking at a much shorter time horizon these days as health or longevity isn’t a given.

    It’s a different perspective vs the young FIREs and older healthy retirees. Especially the older healthy retirees we’ve seen in this forum bagging on the younger FIRE folks for “wasting” their lives doing things other than work and make money.

    I’m sure we’d be financially poorer but likely far richer in experience if we FIRE’d…what’s certainly true is I’d have done a lot more bucket list items before last year when it all could have come to an abrupt end.

    And it’s also why I differ in opinion to many about leaving significant financial wealth behind because FI is freedom to pursue your passion without starving in the process.

    1. Well said. You, like David, recognize that your time is finite. The trick, of course, is balance. Our lives, unpredictable as they are, are all about time and balance.

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